Lease Purchase (by Steve [OH]) Oct 5, 2018 6:59 AM
Lease Purchase (by S i d [MO]) Oct 5, 2018 7:49 AM
Lease Purchase (by Nicole [PA]) Oct 5, 2018 7:50 AM
Lease Purchase (by Vee [OH]) Oct 5, 2018 8:20 AM
Lease Purchase (by Richard [MI]) Oct 5, 2018 9:03 AM
Lease Purchase (by BRAD 20,000 [IN]) Oct 5, 2018 10:04 AM
Lease Purchase (by BRAD 20,000 [IN]) Oct 5, 2018 10:05 AM
Lease Purchase (by Lynda [TX]) Oct 5, 2018 7:58 PM
Lease Purchase (by Robert J [CA]) Oct 6, 2018 6:19 AM
Lease Purchase (by Steve [OH]) Posted on: Oct 5, 2018 6:59 AM Message:
I have a house that I'd like to offer to a handyman on a lease purchase. It needs some work in the kitchen and bathroom. Any tips on structuring the deal? Thank you..!!
--75.187.xx.xx |
Lease Purchase (by S i d [MO]) Posted on: Oct 5, 2018 7:49 AM Message:
Make it a "happy, happy" deal.
You're happy if he completes the process and closes the deal, but also equally happy if he fails to close and you have to take it back.
Per a survey of our group here, 95% of RTOs/Lease-Purchase fail to close and the Seller takes the property back....just for your reference. --173.20.xxx.xxx |
Lease Purchase (by Nicole [PA]) Posted on: Oct 5, 2018 7:50 AM Message:
lawyer up ... VERY state specific. get someone who knows the ins and outs of real estate ... not a general practitioner. --72.70.xxx.x |
Lease Purchase (by Vee [OH]) Posted on: Oct 5, 2018 8:20 AM Message:
Best way is 98 percent down and forgive the remainder, in OH it is 23 months or 20 percent - when that is crossed you need to foreclose which only takes 18-24 months if no extensions are granted. --76.188.xxx.xx |
Lease Purchase (by Richard [MI]) Posted on: Oct 5, 2018 9:03 AM Message:
I recommend you NOT do a lease purchase. As said above, most don't close and problems come up
I'd recommend instead a STRAIGHT OPTION TO PURCHASE. Get an option consideration payment, as much as possible. DO NOT take a tiny amount or he will just consider it rent and walk away. Make it big enough that he won't want to lose it.
Have a regular rent agreement with NO CREDIT towards purchase price.
Have these as SEPARATE DOCUMENTS.
NO CREDIT FOR RENT OR IMPROVEMENTS! NONE!
Put a single year on the option so he puts up or not.
At the end of the year or sooner, either he gets a loan and cashes you out, the option expires or you can negotiate a new option (at the new higher price and with a new option consideration).
Do not allow any assignment clauses.
Do not allow any liens to be placed against the place. Require material and labor releases without fail.
The main things are:
1) don't let him get an equity position that might require you to foreclose.
2) keep the pressure on him to get a loan and be done with it. Put a timetable on repairs. You don't want to have the whole year go by and nothing done.
3) keep an eye on the place to see the work is actually being done.
Very important: have a lawyer experienced in this prepare paperwork. (Have the buyer pay for it). --23.121.xx.xxx |
Lease Purchase (by BRAD 20,000 [IN]) Posted on: Oct 5, 2018 10:04 AM Message:
Steve,
Very state specific.
Richard gave you some great info.
I have been doing this for 20+ years. Only 3 out of 1,000 RTOs has bought the house.
NEVER use the word EQUITY or DOWNPAYMENT.
We have my standard lease so he's RENTING and can be evicted.
He signs a totally separate OPTION TO PURCHASE document with a non-refundable option fee, which is not related to the lease in any way. In Indiana the law says this is NOT a deposit and can be non-refundable. This brings in A LOT of cash. Check your state's deposit laws.
Real world advice: don't mix worker with renter. Workers come and go, residents come and go. It's the same as renting to family. He'll expect preferential treatment, after all, his your main man. You'll be shy about demanding rent and increases for fear of driving away your handyman.
AND avoid the LL wealth guilt or white knight syndrome of trying to save his family by "giving away" a house.
If your REALLY want to help him, give him a raise. You'll be a hero, he's more likely to stick around, and no confused relationships.
Help him get a loan. Loans are now easier than ever.
BRAD
--68.50.xxx.xxx |
Lease Purchase (by BRAD 20,000 [IN]) Posted on: Oct 5, 2018 10:05 AM Message:
PS
If he cannot get a loan why should you grant him credit?
BRAD --68.50.xxx.xxx |
Lease Purchase (by Lynda [TX]) Posted on: Oct 5, 2018 7:58 PM Message:
Did it 3 times--got the property back 3 times. Each time there as hard feelings and dif bad circumstances. And lots of clean-up and make ready on my part--cost more than the security deposit. Have him get his own loan and pay you in full! Or just keep on renting it. MANY things can and will go wrong. Eventually the property suffers and you with it. --108.87.xx.xxx |
Lease Purchase (by Robert J [CA]) Posted on: Oct 6, 2018 6:19 AM Message:
Here in sunny California when your tenant signs a lease-option contract, and pay an extra amount towards ownership -- in fact they are an "owner by contract". Therefore if they fail to pay the monthly rent, a standard eviction won't work. You first have to deal with their ownership by contract and have he courts rule it's no longer valid. That can take up to many months. After that you can file for an eviction. So a year later you may get your property back with a large hole in your pocket.
I agree with all comments from others, tenants fail to close to can exercise the purchase.
I offered a nice home to a tenant for them to purchase. They had lived there for many years and were responsible tenants. They had saved up $34,000 and I asked for a $50,000 down payment for the house, agreed to be a $385,000 price. I would carry the first mortgage.
Before they could save any more money, two children graduated high school and the parents purchased new cars for them to drive themselves to school. Never mind Los Angeles City Collage was only a few miles away and several single bus routes could take them there for a $45 monthly bus pass.
Then two daughters turned 15 and they threw each of them a $7,000 Latina birthday celebration. So instead of saving another $45,000, they spent the money on their kids over a 3 year period.
Again I offered them the house, this time for $475,000. Then they went to borrow the needed funds to come up with the $50,000 down. I rejected borrowing a down payment when I was going to carry the mortgage. So I gave them 1 more year to come up with the funds. Instead the wife gave up her job and had their 8th child. With only a single income they couldn't afford to buy the house anymore. I sold it in 30 days for $600,000. They are still renting the house, 10 years later from the new owner, but paying 50% higher rent. --47.156.xx.xx |
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